The latest amendment to Jersey's trust legislation comes into force today (October 25). The Trusts (Amendment No.6) (Jersey) Law 2013 provides a clear statutory framework for applications made on the basis of the rule in Hastings-Bass and the doctrine of mistake.

Earlier this year, the Supreme Court of England and Wales gave its judgment in the combined cases of Pitt v Holt and Futter v Futter, relating to the rule in re Hastings-Bass and the doctrine of mistake. See our client briefing  for more information. Notably, the Supreme Court shifted the English test for mistake into near alignment with the Jersey test, as previously determined by the Royal Court of Jersey.

However, in respect of the rule in Hastings-Bass, the Supreme Court's decision in Pitt v Holt and Futter v Futter confirmed that, potentially Jersey and English law had moved in different directions regarding the criteria required for a successful Hastings-Bass application, with a stricter test applying under English law. In Pitt v Holt, the English Supreme Court ruled that the existence of a breach of fiduciary duty was a pre-requisite for a successful Hastings-Bass application. That contrasted with earlier decisions of the Jersey Courts which concluded that a breach of fiduciary duty was not a necessary factor to invoke the Hastings-Bass principle (e.g. Leumi Overseas Trust Corporation Limited v Howe [2007]). For full details click here.

These principles until now remained established by way of case law, rather than statute. However, Amendment No. 6 to the Trusts (Jersey) Law 1984 introduces a statutory framework for bringing applications to the Royal Court to set aside a transfer into a Jersey trust, or the exercise of a power in relation to a Jersey trust, on the grounds of mistake or those falling within Hastings-Bass.

Mistake includes a mistake as to fact or law, provided the mistake is of sufficiently serious character and the action would not have been taken without the mistake being made. For the Hastings-Bass rule, it must be shown that the person taking the action failed to take into account relevant considerations, or took into account irrelevant considerations, and would not otherwise have taken such action. The amendments also set out who may make an application to the court on these grounds.

Jersey's stance on Hastings-Bass is now to be enshrined in stature, and Amendment No. 6 will uphold the position stated in the Leumi Overseas Case, namely that lack of care or other fault on the part of the trustee (e.g. a breach of fiduciary duty) is not a pre-requisite.

It will still be for the Royal Court to decide whether an action is voidable on the grounds of mistake or Hastings-Bass. However, these amendments introduced by Amendment No.6 provide a clear statutory framework for making such an application, rather than relying on complicated case law. This will provide comfort to settlors, beneficiaries and trustees by reducing the risks associated with mistake and Hastings-Bass applications, (and a less onerous test for a successful Hastings-Bass application), thereby making Jersey an ever more attractive trust jurisdiction.

If you would like more information on this topic, please let us know and we will arrange a suitable time to come to your office to do a presentation for you and your colleagues.

Please contact angela.dingle@collascrill.com to arrange.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.